Aereo Is “Unlikely” To Survive Broadcaster Suit: Moody's

The debt rating company says that several broadcasters who have taken Aereo to court probably will defeat its new effort to sell customers a streaming service for over-the-air signals. The courts will agree with the plaintiffs who say that the effort violates their copyrights. Aereo says that it’s just offering remote access to the kinds of services consumers can already get at home using an antenna, DVR, and a Slingbox. If Aereo were to prevail, Moody’s Investors Service says, then it would be a serious blow to some of the media business’ largest companies. It could undermine broadcasters’ ability to demand retransmission consent payments from pay TV providers. (Why should they pay if Aereo can retransmit local station signals for free?) And if lots of people liked Aereo’s $12 a month service — which also offers the ability to record up to 40 hours of programming and replay it on demand, much like a DVR — then “it would also jeopardize (broadcasters’) advertising revenue.” Ratings services including Nielsen “do not currently have the capability of capturing online viewing accurately.” Cable has less to fear from Aereo: It would mostly appeal to viewers “who already don’t have cable” or who want to watch TV on mobile devices. Although it could compete with cable and satellite TV Everywhere initiatives, Aereo might not provide a big incentive for consumers to cancel their pay TV service. The ranks of cost-cutters “primarily consist of a young demographic that asn’t yet transitioned into household formation where TV viewing is more ubiquitous, or those who are doing without cable as result of tough economic times.” Aereo launched this week in New York City, although its case is still before the U.S. District Court.

3 Comments

When tape-recorders were introduced, the movie industry sued and the law, by precedent, was changed to allow private home viewers to make their own recordings. If it had been up to the industry, then no one would have been allowed to record television at home.

I’m not making a judgement here, but what if the judges in such cases related to aereo-like services were able to make the same sort of difference, in the practical application of law.

On the other hand, a simple workaround could involve either treating each customers account and stream as a personal direct connection with a myriad duplicate ones, a virtual private Slingbox; or another solution would be give Aereo account holders/customers their own mobile digital tuners for their tablets and smartphones, which some others are doing including FilmON.

No one working in the entertainment industry would believe that a company making money off charging subscribers for the access should make money off distributing the tv channels without having to pay compensation to those content/network providers, but at the same time, it is a technological inevitability, and the interim measure can be efficient where we get to the end-point of iCloud-equivalent straightaway or we can be forced to wait until a younger generation take charge of the institutions being technologically intransigent, and in the mean time directly use Slingbox, VPN’s, etc.

Mark • on Mar 16, 2012 3:43 pm

What if they just paid retransmission and stopped building this fake antenna farm, remuxing/re-encoding infrastructure in the first place?

Retrans of networks costs very little. Their technology complex actually (a) costs a lot (b) is a cable system by definition and therefore requires retrans agreements (c) arguably isn’t even real; there are serious legitimate technical questions as to whether all those tiny antennas are actually doing anything.

If you want to get your own antenna and Slingbox (or equivalent), that’s already legal, there is no monthly fee, and no one is suing you, threatening to sue you, or demanding an agreement from you. If you want to be a 3rd-party middleman, take MPEG-2 19 Mbps signals off the air, convert them to low-bitrate H.264, transmit them to subscribers, also DVR them, etc., you have to sign an agreement and pay retrans fees. This is established law. If Comcast, DirecTV, TWC, Cox, etc. all pay, Aereo has to pay…

The only mystery is why this crazy idea got funded. I suspect $2-3/sub would’ve covered all the retrans, still made the business viable, saved millions in infrastructure and legal fees, and let us find out if people cared about this idea… Now, we’ll never really know.

Mark, that’s a great idea for a business plan, but the broadcasters won’t go along with it. The major broadcast networks are owned by a handful of corporations that also own the major cable networks. They’re making healthy profits off the status quo, so they don’t want it changed.

Although it feels like streaming OTA TV is inevitable, remember that the technology for the Celestial Jukebox (every song ever recorded, available on demand) has been in place for over a decade, but we’re still not very close to it. An intelligent licensing system could make a lot more content available to a lot more internet users. Maybe we’ll see it one day.

PS: Shakir, my digital tuner from FilmOn is still on order, but based on my experience with similar-sized USB OTA tuners, I’m skeptical. Here’s hoping!